Shadow chancellor George Osborne has outlined plans to increase the state pension age for men to 66 from 2016, rather than the 2026 deadline set by the Government. He would make the same increase for women from 2020.
Age rise to save costs
Announcing the proposal at the Conservative party conference in Manchester, Osborne linked the cost-saving measure with a pledge to restore the earnings link for the basic state pension. He promised ‘a more generous state pension for all’ but identified the higher qualifying age as a ‘trade-off’ to help fund this. Mr Osborne said that Germany, Holland and Australia were already bringing in similar changes but that ‘no one who is a pensioner today, or approaching retirement soon, will be affected’.
Increasing state pension age is generally accepted as a necessary move by all three political parties. The government introduced a timetable in the 2007 Pensions Bill that called for an increase in pension age for women from 60 to 65 between 2010 and 2020 and a rise from 65 to 66 for both sexes by 2026, to 67 by 2036 and to 68 by 2046. It was uncertain from Mr Osborne’s speech if he proposes to bring forward these later changes, but, if elected, he intends to hold a pensions ‘review’.
Commenting on the Conservatives’ plan, a spokesman for Age Concern and Help the Aged said: ‘The Tories’ plan to bring forward the increase to the state pension will be a big shock to many people planning their retirement especially those in their mid-50s.’
‘Legislation to increase state pension age was only passed in 2007 after extensive debate. Any move to increase state pension age more quickly must be part of a wider strategy including a review of the basic state pension and a commitment to end pensioner poverty.’
Next year’s pension changes
2010 will bring major changes to the state pension system regardless of which party wins the next general election. The 2007 Pension Act cuts the number of ‘qualifying years’ (of National Insurance contributions) needed to receive a full basic state pension from 39 for women and 44 for men to 30 years for all.
Women will see their pension age rise from 2010, increasing on a sliding scale until it reaches 65 in 2020.
Pension forecast and further information
To check your pension entitlement you can get a pension forecast from the Pension Service. For independent information on pensions you can contact the Pensions Advisory Service or look at our online Which? money advice on pensions.
Which? Money when you need it
You can follow @WhichMoney on Twitter to keep up-to-date with our Best Rates and Recommended Provider product and service reviews.
Sign up for the latest money news, best rates and recommended providers in your newsletter every Friday.
Or for money-saving tips, and news of how what’s going on in the world of finance affects you, join Melanie Dowding and James Daley for the Which? Money weekly money podcast
For daily consumer news, subscribe to the Which? news RSS feed here. And to find out how we work for you on money issues, visit our personal finance campaigns pages.